Large industrial enterprises require significant funds for modernisation and expansion. When large amounts of money are required, it is generally raised through external sources of funds, which lie outside the organisation such as lenders and investors.

A primary source suitable for such requirements is financial institutions. Both central and state governments have established these institutions, often called development banks, to provide industrial finance. This source is considered specifically appropriate when large funds are required for expansion, reorganisation, and modernisation of an enterprise.

Enterprises can also raise capital through other external sources like the issue of debentures, borrowing from commercial banks, and accepting public deposits. These are common examples used by business organisations when substantial funds are needed. However, obtaining funds from these sources may be costly and often requires the business to mortgage its assets as security.

Additionally, with the globalisation of the economy, companies have access to international financing. Indian companies can raise funds from global capital markets to meet their financial requirements for growth and technological upgrades.